* Euro drops as finance ministers meet
* U.S. Treasuries supported by Bernanke remarks
* Oil, commodities cling on to gains
(Updates with U.S. markets open, changes byline, dateline,
previous LONDON)
By Manuela Badawy
NEW YORK, Dec 6 (Reuters) - The euro fell sharply against
the dollar on Monday and stocks dipped as fears remained over
sovereign debt problems in Europe.
U.S. Treasuries rose prompted by safe-haven bids after
Federal Reserve Chairman Ben Bernanke said on Sunday the Fed
may buy more than the $600 billion in U.S. government bonds it
has committed to purchase, if the economy failed to respond.
[]
Oil and gold prices held near its highest in two years and
since mid-November respectively.
"The U.S. showed you need to take extremely strong actions
to overcome the threat of a broad financial crisis," said Rick
Meckler, president of investment firm LibertyView Capital
Management in New York.
"The feeling was Europe has only gone about two-thirds of
the way, and there was some hope they will go to a full
throttle protection plan."
Euro zone finance ministers met on Monday amid pressure to
increase the size of a 750 billion euro ($1,006 billion) safety
net for debt-stricken members in hopes of halting potential
contagion to other countries. For details, see []
Stocks and the euro have moved in tandem of late with the
euro looked at as a proxy for regional debt concerns.
The Dow Jones industrial average <> was down 14.57
points, or 0.13 percent, at 11,367.52. The Standard & Poor's
500 Index <.SPX> was down 1.97 points, or 0.16 percent, at
1,222.74. The Nasdaq Composite Index <> was down 0.72
points, or 0.03 percent, at 2,590.74.
The pan-European FTSEurofirst 300 index of European shares
<>, were flat with optimism that the U.S. Federal
Reserve may pump more funds into the economy offset by
uncertainty over the result of a meeting of euro zone finance
ministers. The MSCI world equity index <.MIWD00000PUS> was down
0.1 percent at 321.81.
Japan's stocks index, The Nikkei <> closed the day
down 0.1 percent on profit-taking after they hit a six-month
high last week.
EURO UNDER PRESSURE
The euro <EUR=> was down 0.93 percent at $1.3289, its first
decline in four sessions, as euro zone finance ministers are
put under pressure to increase the size of its rescue fund
after an 85 billion euro aid package for Ireland failed to calm
markets.
The dollar gained against a basket of currencies, with the
U.S. Dollar Index <.DXY> up 0.51 percent at 79.78. Against the
Japanese yen, the dollar <JPY=> was up 0.22 percent at 82.80
from a previous session close of 82.620.
An International Monetary Fund report, to be delivered to
the meeting in Brussels, will say the euro zone should increase
the size of its 750 billion euro rescue fund and the European
Central Bank should boost its bond-buying markedly.
U.S. Treasuries rose yet gains were limited as investors
prepared for this week's $66 billion in coupon-bearing supply.
Traders have also been selling into strength, either to lock in
short-term profits or to unwind earlier positions tied to the
Fed's latest quantitative easing program, dubbed QE2.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
13/32, with the yield at 2.9572 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 1/32, with the yield at 0.4484
percent. The 30-year U.S. Treasury bond <US30YT=RR> was up
19/32, with the yield at 4.2806 percent.
Meanwhile, oil eased from a 26-month high near $90 as the
dollar strengthened, countering support from higher demand
caused by cold weather in Europe and parts of the United
States. Oil and dollar-denominated commodities often move
inversely to the dollar.
Crude oil <CLc1> was down 2 cents, or 0.02 percent, to
$89.17 per barrel, after trading as high as $89.76, the highest
since October 2008, as a cold spell in Europe and in parts of
the United States should limit the downside for prices because
of greater heating demand.
Spot gold prices <XAU=> rose 36 cents, or 0.03 percent, to
$1414.80 an ounce. It touched a record $1,424.10 early in
November.
While strength in the U.S. currency kept a lid on further
gains in dollar-priced gold, gold hit record highs in sterling
terms and Japanese yen-denominated bullion hit its highest
since early 1983 as risk aversion stoked broad-based gains in
the metal.
(Additional reporting by Leah Schnurr, Richard Leong and
Julie Haviv in New York, and Mike Peacock, Alex Lawler and Jan
Harvey in London. Editing by W Simon )
